Microsoft Almost Breaks Even on Xbox 360

One of the big complaints about the original Xbox was that Microsoft, unlike Sony and Nintendo, never got to the point at which the console itself was turning a profit. Typically, video game makers introduce a new console and take a loss on each unit sold during its first year or so, and then make up the difference as component prices fall and R&D costs are made up. Also, sales of software and accessories usually provide most profits anyway. With Xbox 360, Microsoft has pledged to turn its console into a money maker over time, as with Sony and Nintendo, and this week, a new report suggests that the company might be on the right track. According to iSuppli, Microsoft loses just $11 on each Xbox 360 Core System it sells, and $153 on the so-called premium bundle, which also includes a 20GB hard disk, a headset, a wireless controller, and a remote control. As with other game makers, however, Microsoft sees a huge profit on all software and accessory sales, and will likely start making money on the consoles within a year or two. If so, that's quite a turnaround for Microsoft, which has spent over $12 billion developing its Xbox systems so far